What does the Corporate Transparency Act mean for your LLC?
If you have a limited liability company (LLC) or are thinking of creating one, you should be aware of the New Corporate Transparency Act (CTA), which will come into effect in 2024 and will bring significant changes for your business.
The CTA is a federal law that aims to prevent money laundering, terrorism financing and other illicit activities that use shell or front companies to hide the identity of their real owners.
The CTA will require certain companies, including LLCs, to report information about their real beneficiaries to the Financial Crimes Enforcement Network (FinCEN), which is an agency of the Department of the Treasury of the United States.
What changes can LLCs expect in 2024?
The CTA establishes that LLCs must report to FinCEN the name, date of birth, address and identification number of the real beneficiaries of the company, that is, the people who own or control 25% or more of the company or who have substantial power over it.
This means that LLCs will have to identify and verify the information of their members, as well as any other person who has influence or interest in the company, such as partners, managers, shareholders, etc.
Additionally, they will have to submit the report to FinCEN within two years after the entry into force of the CTA, which is expected to be in 2024, and update it every time there is a change in the information of the real beneficiaries.
LLCs that fail to comply with the CTA may face fines of $500 up to USD 250,000 and jail time of up to two years for providing false or incomplete information to FinCEN.
How can they better prepare for these changes?
To comply with the CTA and avoid sanctions, LLCs must take the following steps:
Inform yourself: Stay up to date with the latest news and updates on the regulations of LLCs. This may involve subscribing to relevant newsletters, attending webinars and conferences, and consulting regularly with a financial or accounting advisor.
Identify the final beneficiaries of your LLC: A final beneficiary is an individual who owns at least 25% of the interests of an entity. You will have to provide detailed information about these individuals to FinCEN.
Prepare to submit the BOI Report: This is a requirement that requires LLCs to provide detailed information about their owners and final beneficiaries to FinCEN. Make sure you have all the information you need to complete this report.
Consult with an expert: Consider consulting with an accounting or legal expert to make sure you are complying with all the new obligations. At BookkeeperPro we can provide you with the necessary advice to navigate these new regulations.
Review and update your business plans and financial strategies regularly: This will help you adapt to any changes in the laws and regulations.
What is the deadline to comply with these obligations?
The deadline to comply with the new obligations for LLCs in 2024 depends on when the company was registered. For companies registered before 2024, the deadline is January 1, 2025. For companies registered from January 2024 onwards, the deadline is 30 days from the state notification of the company’s registration
Do you have to panic with these new regulations?
No, you don’t have to panic with these new regulations. Although they may seem overwhelming, it is important to remember that they are designed to protect businesses and the economy in general. In addition, there are many resources available to help you understand and comply with these regulations. Companies like BookkeeperPro can provide you with the necessary advice to navigate these new regulations. Remember, preparation and knowledge are the key to managing any change in regulations effectively.
What benefits can the CTA bring to LLCs?
Complying with the CTA not only avoids sanctions, but also can bring benefits to LLCs, such as the following:
Improve their reputation and trust in the market, by demonstrating that they are legitimate, transparent and responsible businesses.
Facilitate their access to credit and business opportunities, by having an official record that validates their existence and solvency.
Contribute to the prevention of money laundering, terrorism financing and other illicit activities, by preventing the use of shell or front companies to hide the identity of their real owners.
How can BookkeeperPro help you navigate these new waters?
BookkeeperPro is a leading accounting services company in Virginia Beach, that offers a comprehensive and personalized solution for LLCs that want to comply with the CTA and optimize their financial management.
BookkeeperPro saves you time, money and trouble, and allows you to focus on the growth of your LLC.
Don’t let the CTA catch you off guard. Contact us today and let us help you comply with this new regulation and improve your financial management. BookkeeperPro, your accounting ally in Virginia Beach.